Unlike conventional energy sources, green hydrogen offers a way to store and transfer energy without emitting harmful pollutants, positioning it as essential to a sustainable and net-zero future. By converting electrical power from renewable sources into green hydrogen, these low-carbon-intensity energy storage systems can release clean, efficient power on demand through combustion engines or fuel cells. When produced emission-free, hydrogen can decarbonize some of the most challenging industrial sectors, such as steel and cement production, industrial processes, and maritime transport.
“Green hydrogen is the key driver to advance decarbonization,” says Dr. Christoph Noeres, head of green hydrogen at global electrolysis specialist thyssenkrupp nucera. This promising low-carbon-intensity technology has the potential to transform entire industries by providing a clean, renewable fuel source, moving us toward a greener world aligned with industry climate goals.
Accelerating production of green hydrogen
Hydrogen is the most abundant element in the universe, and its availability is key to its appeal as a clean energy source. However, hydrogen does not occur naturally in its pure form; it is always bound to other elements in compounds like water (H2O). Pure hydrogen is extracted and isolated from water through an energy-intensive process called conventional electrolysis.
Hydrogen is typically produced today via steam-methane reforming, in which high-temperature steam is used to produce hydrogen from natural gas. Emissions produced by this process have implications for hydrogen’s overall carbon footprint: worldwide hydrogen production is currently responsible for as many CO2 emissions as the United Kingdom and Indonesia combined.
A solution lies in green hydrogen—hydrogen produced using electrolysis powered by renewable sources. This unlocks the benefits of hydrogen without the dirty fuels. Unfortunately, very little hydrogen is currently powered by renewables: less than 1% came from non-fossil fuel sources in 2022.
A massive scale-up is underway. According to McKinsey, an estimated 130 to 345 gigawatts (GW) of electrolyzer capacity will be necessary to meet the green hydrogen demand by 2030, with 246 GW of this capacity already announced. This stands in stark contrast to the current installed base of just 1.1 GW. Notably, to ensure that green hydrogen constitutes at least 14% of total energy consumption by 2050, a target that the International Renewable Energy Agency (IRENA) estimates is required to meet climate goals, 5,500 GW of cumulative installed electrolyzer capacity will be required.
However, scaling up green hydrogen production to these levels requires overcoming cost and infrastructure constraints. Becoming cost-competitive means improving and standardizing the technology, harnessing the scale efficiencies of larger projects, and encouraging government action to create market incentives. Moreover, the expansion of renewable energy in regions with significant solar, hydro, or wind energy potential is another crucial factor in lowering renewable power prices and, consequently, the costs of green hydrogen.
Electrolysis innovation
While electrolysis technologies have existed for decades, scaling them up to meet the demand for clean energy will be essential. Alkaline Water Electrolysis (AWE), the most dominant and developed electrolysis method, is poised for this transition. It has been utilized for decades, demonstrating efficiency and reliability in the chemical industry. Moreover, it is more cost effective than other electrolysis technologies and is well suited to be run directly with fluctuating renewable power input. Especially for large-scale applications, AWE demonstrates significant advantages in terms of investment and operating costs. “Transferring small-scale manufacturing and optimizing it towards mass manufacturing will need a high level of investment across the industry,” says Noeres.
Industries that already practice electrolysis, as well as those that already use hydrogen, such as fertilizer production, are well poised for conversion to green hydrogen. For example, thyssenkrupp nucera benefits from a decades-long heritage using electrolyzer technology in the chlor-alkali process, which produces chlorine and caustic soda for the chemical industry. The company “is able to use its existing supply chain to ramp up production quickly, a distinction that all providers don’t share,” says Noeres.
Alongside scaling up existing solutions, thyssenkrupp nucera is developing complementary techniques and technologies. Among these are solid oxide electrolysis cells (SOEC), which perform electrolysis at very high temperatures. While the need for high temperatures means this technique isn’t right for all customers, in industries where waste heat is readily available—such as chemicals—Noeres says SOEC offers up to 20% enhanced efficiency and reduces production costs.
Thyssenkrupp nucera has entered into a strategic partnership with the renowned German research institute Fraunhofer IKTS to move the technology toward applications in industrial manufacturing. The company envisages SOEC as a complement to AWE in the areas where it is cost effective to reduce overall energy consumption. “The combination of AWE and SOEC in thyssenkrupp nucera’s portfolio offers a unique product suite to the industry,” says Noeres.
While advancements in electrolysis technology and the diversification of its applications across various scales and industries are promising for green hydrogen production, a coordinated global ramp-up of renewable energy sources and clean power grids is also crucial. Although AWE electrolyzers are ready for deployment in large-scale, centralized green hydrogen production facilities, these must be integrated with renewable energy sources to truly harness their potential.
Making the green hydrogen market
Storage and transportation remain obstacles to a larger market for green hydrogen. While hydrogen can be compressed and stored, its low density presents a practical challenge. The volume of hydrogen is nearly four times greater than that of natural gas, and storage requires either ultra-high compression or costly refrigeration. Overcoming the economic and technical hurdles of high-volume hydrogen storage and transport will be critical to its potential as an exportable energy carrier.
In 2024, several high-profile green hydrogen projects launched in the U.S., advancing the growth of green hydrogen infrastructure and technology. The landmark Inflation Reduction Act (IRA) provides tax credits and government incentives for producing clean hydrogen and the renewable electricity used in its production. In October 2023, the Biden administration announced $7 billion for the country’s first clean hydrogen hubs, and the U.S. Department of Energy further allocated $750 million for 52 projects across 24 states to dramatically reduce the cost of clean hydrogen and establish American leadership in the industry. The potential economic impact from the IRA legislation is substantial: thyssenkrupp nucera expects the IRA to double or triple the U.S. green hydrogen market size.
“The IRA was a wake-up call for Europe, setting a benchmark for all the other countries on how to support the green hydrogen industry in this startup phase,” says Noeres. Germany’s H2Global scheme was one of the first European efforts to facilitate hydrogen imports with the help of subsidies, and it has since been followed up by the European Hydrogen Bank, which provided €720 million for green hydrogen projects in its pilot auction. “However, more investment is needed to push the green hydrogen industry forward,” says Noeres.
In the current green hydrogen market, China has installed more renewable power than any other country. With lower capital expenditure costs, China produces 40% of the world’s electrolyzers. Additionally, state-owned firms have pledged to build an extensive 6,000-kilometer network of pipelines for green hydrogen transportation by 2050.
Coordinated investment and supportive policies are crucial to ensure attractive incentives that can bring green hydrogen from a niche technology to a scalable solution globally. The Chinese green hydrogen market, along with that of other regions such as the Middle East and North Africa, has advanced significantly, garnering global attention for its competitive edge through large-scale projects. To compete effectively, the EU must create a global level playing field for European technologies through attractive investment incentives that can drive the transition of hydrogen from a niche to a global-scale solution. Supportive policies must be in place to also ensure that green products made with hydrogen, such as steel, are sufficiently incentivized and protected against carbon leakage.
A comprehensive strategy, combining investment incentives, open markets, and protection against market distortions and carbon leakage, is crucial for the EU and other countries to remain competitive in the rapidly evolving global green hydrogen market and achieve a decarbonized energy future. “To advance several gigawatt scale or multi-hundred megawatts projects forward,” says Noeres, “we need significantly more volume globally and comparable funding opportunities to make a real impact on global supply chains.”
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